With the US Congress entering the final stretch of its legislative calendar, the odds of the proposed CLARITY Act have dropped sharply—according to Galaxy Digital’s Alex Thorn, down to just 10% for passage in 2026 from a much higher estimate in May. The change underscores how fragile the bill’s political pathway has become, and what could follow if lawmakers fail to deliver “rules of the road” for crypto markets.

As the clock tightens, attention is shifting toward regulatory contingency plans. If CLARITY does not advance, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are expected to move independently—while crypto firms and major industry stakeholders continue pushing for coordinated outcomes. Separate threads are also unfolding across cyber defense, prediction-market oversight, Ethereum’s post-quantum roadmap, and stablecoin auditing.

Key takeaways

• Galaxy Digital cut its CLARITY Act passage estimate for 2026 to 10%, down from 75% in May, citing unresolved political issues and limited Senate time.
• The Senate reconvenes on Sept. 14 with only 14 days in session, making the bill’s timeline dependent on near-immediate procedural momentum after return.
• If CLARITY fails, the SEC and CFTC are positioned to issue their own crypto-market frameworks, raising the risk of overlapping or inconsistent rules.
• Crypto companies have asked frontier AI labs for earlier access to more capable cybersecurity models for Bitcoin developers, amid continuing wallet breach incidents.
• Regulation of prediction markets remains fragmented, with the CFTC pushing back against state restraints while courts and local bodies challenge the boundaries of federal versus state authority.

CLARITY timeline tightens as passage chances fall

Galaxy Digital’s research head Alex Thorn said the probability of the CLARITY Act passing in 2026 is now “just 10%.” In May, Thorn’s estimate was far higher at 75%, reflecting how quickly political momentum has eroded as negotiations encountered unresolved issues.

One core constraint is the Senate calendar. According to the reporting cited in the source, the Senate will have only 14 days in session after reconvening on Sept. 14. That leaves little room for delays unless lawmakers move quickly on procedural steps, including an initial motion to proceed immediately upon return. Thorn’s view, as stated, is that the bill would need to effectively take over the working session to pass within the window.

The stakes are not only legislative but regulatory. If CLARITY does not advance, the SEC and CFTC plan to step in with their own rulemaking for crypto markets—an outcome Thorn and others appear to view as less desirable than a single comprehensive framework. The SEC, for its part, had scheduled an open meeting to outline a path toward clearer “rules of the road,” but the meeting was canceled due to an “unforeseen scheduling issue,” according to the source.

There are also indications of political sensitivity around the sequencing of agency action. The White House was reportedly unhappy that the SEC might effectively go “rogue” on crypto rules, potentially complicating delicate negotiations to get CLARITY over the line.

High-level coordination attempts to keep CLARITY alive

Despite the reduced odds, stakeholders appear to be mobilizing around a final push. The source notes that SEC Chair Paul Atkins, President Donald Trump, and representatives from major crypto-adjacent institutions—including Coinbase, a16z, Ripple, Chainlink, NYSE, and Nasdaq—are expected to meet at the White House on Wednesday to discuss crypto regulation and ways to advance the bill.

The following day, the CFTC is scheduled to convene its new Innovation Advisory Committee to discuss regulation of crypto alongside AI and prediction markets. In practice, these parallel calendars reflect a dual-track posture: one aimed at passing CLARITY, and another preparing for continued regulatory work irrespective of whether Congress succeeds.

For investors and market participants, the immediate question is not whether enforcement will continue, but how predictable it will be. A comprehensive statute could reduce uncertainty around classification and jurisdiction. A patchwork approach—created by separate SEC and CFTC rulemaking—could increase compliance complexity, particularly for businesses straddling securities and commodities characterizations.

Cybersecurity push grows as more AI-enabled threats emerge

Beyond Washington, the crypto ecosystem is responding to evolving threat models—especially those shaped by increasingly capable AI systems. Multiple cryptocurrency firms, including Anchorage Digital, BitGo, Bitwise, Blockstream, Ledger, and Trezor, urged frontier AI labs to provide Bitcoin developers with early access to top-tier models.

The push is described in an open letter published by the Bitcoin Policy Institute. The letter argues that public frontier systems may impose guardrails that restrict defenders, forcing developers to rely on less capable open-weight models rather than tools closer to what attackers can use.

“Without dedicated access programs, defenders may lack the tools needed to keep pace with evolving threats to the infrastructure they maintain.”

The source links this urgency to recent incidents, including a reported $116 million theft from Coldcard hardware wallets, followed by a “Bitcoin Red Team” effort that used AI to identify thousands of potential cybersecurity issues using open-source Chinese models. It also points to ongoing data exposure risks affecting wallet users.

According to the source, Trezor reported a data breach involving personal details of roughly 14,000 users through its shipping provider ShipMonk, with customers at higher risk for phishing attacks if they received products in multiple listed regions between May 10 and Aug. 8. Separately, SafePal disclosed a breach affecting nearly 40,000 users’ order information, including names, addresses, and purchasing data, and reported taking down fraudulent websites and phishing links tied to the incident.

What to watch here is whether the request for AI access translates into concrete programs for defenders—because the gap between attacker capability and defensive tooling can directly affect the speed at which vulnerabilities are identified and mitigated.

Prediction markets face continued federal-state friction

Prediction market regulation remains a live battlefield between federal oversight and state restrictions. The CFTC ordered prediction market platform Kalshi to disregard a restraining order in New York and continue operating normally, calling New York’s enforcement action a “market emergency” because it could prevent Kalshi from operating nationally.

The CFTC’s reasoning, as cited in the source, centers on the view that the Commodity Exchange Act requires a uniform national derivatives market. CFTC Chair Michael Selig said Congress did not intend derivatives exchanges to face a “patchwork” of state gaming laws.

However, the regulatory conflict is far from settled. A Washington state judge later ordered Kalshi to stop operating in Washington and rejected Kalshi’s argument that federal commodities law preempts Washington’s gambling law. The source says Kalshi was ordered to implement IP-address and residency-based geofencing by Aug. 19 and a GeoComply multi-source geofencing system by Sept. 2.

Meanwhile, local-level scrutiny is also growing: the New York City Council launched an investigation into prediction market firms to examine whether influencer-driven marketing uses “false and deceptive” tactics targeting young adults, according to the source.

For platforms, compliance strategy may increasingly hinge less on one-time legal outcomes and more on the operational reality of jurisdiction-by-jurisdiction constraints—especially where geofencing becomes a workaround rather than a definitive legal solution.

Ethereum narrows its post-quantum choices and refocuses Hegotá scope

On the network development front, the Ethereum Foundation is adjusting its post-quantum architecture. Researcher Justin Drake said the foundation is moving away from the Poseidon hash function in its plan, instead leaning on established alternatives such as SHA or BLAKE.

The source frames the rationale around recent progress: Poseidon is designed to work well with zero-knowledge proofs and can help compress post-quantum signature sizes, but Drake argued that developments mean SNARKs can be tailored to work better with existing hash functions.

According to the same reporting, Ethereum is targeting a production-ready “leanVM” for 2027, with deployments across Ethereum’s consensus, data, and execution layers in 2028. Separately, developers are reviewing 66 proposals to narrow scope for the next major upgrade after “Glamsterdam,” referred to as Hegotá.

The source notes that the censorship-resistance proposal FOCIL is currently the only Ethereum Improvement Proposal scheduled for inclusion, with several other EIPs focused on privacy. Developers are aiming to ship Hegotá next year, while Glamsterdam is expected in the coming months.

Tether completes first full financial audit with clean KPMG opinion

In stablecoin auditing, Tether announced it has completed the first full independent audit of its annual financial statements. The source says KPMG US issued a clean opinion on Tether’s 2025 accounts, covering the year ended Dec. 31, 2025, including balance sheet items, income statement figures, cash flows, and the assets purportedly backing issued tokens.

Tether also stated that the audited statements showed reserves exceeding liabilities by $6.814 billion. The source emphasizes that this full audit differs from Tether’s quarterly reserve attestations by subjecting broader financial statements and underlying evidence to independent examination.

For market participants, the practical value is not in the audit’s existence alone but in what an audited process adds to transparency: independent verification of the evidence and the full set of financial statements, rather than periodic reserve-focused attestations.

Looking ahead, the biggest variable remains congressional timing: whether CLARITY can gain enough procedural momentum before the Senate’s short September window closes. At the same time, the regulatory direction agencies choose if Congress falls short—and how quickly firms respond with security and compliance tooling—may matter as much to real-world operations as any eventual statute.

CLARITY odds narrow as bill enters the final straight

Galaxy Digital has lowered its estimate of the CLARITY Act’s chances of passing in 2026 to just 10%. In May it had estimated the chance of passage at 75%.

Multiple political issues remain unresolved and the Senate only has 14 days in session to pass the bill after it reconvenes on Sept. 14.

Unless an initial motion to proceed vote occurs immediately upon lawmakers’ return to Washington, there would only be enough time for the CLARITY Act to pass if it “dominates basically the entire working session,” wrote Galaxy head of research, Alex Thorn.

If the bill doesn’t pass, the SEC and CFTC plan to step into the breach by issuing their own rules for crypto markets. The SEC scheduled an open meeting on Friday to unveil its “clear rules of the road” but then cancelled it due to an “an unforeseen scheduling issue.” The White House was reportedly unhappy that the SEC going rogue on crypto rules could anger Democrats and scuttle the delicate negotiations underway to pass CLARITY.

SEC chair Paul Atkins, President Donald Trump and a series of big wigs from Coinbase, a16z, Ripple, Chainlink, NYSE and Nasdaq will meet at the White House on Wednesday to discuss crypto regulation and explore ways to get the bill over the line.

The following day the US Commodity Futures Trading Commission’s new Innovation Advisory Committee will meet to discuss regulation of crypto, AI and prediction markets.

Crypto companies seek access to frontier AI cybersecurity capabilities as fears of more hacks grow

Cryptocurrency companies including Anchorage Digital, BitGo, Bitwise, Blockstream, Ledger and Trezor have urged frontier artificial intelligence (AI) labs to give Bitcoin developers early access to their most capable models.

An open letter, published by the Bitcoin Policy Institute said Bitcoin Core devs and other crypto developers are being blocked by guardrails on publicly available frontier systems, leaving them to rely on less capable open-weight models.

“Without dedicated access programs, defenders may lack the tools needed to keep pace with evolving threats to the infrastructure they maintain.” 

The threat from AI identified exploits has become a key focus after $116 million was stolen from Coldcard hardware wallets. The Bitcoin Red Team subsequently used AI to identify thousands of potential cybersecurity issues using open source Chinese models.

New threats to hardware wallet owners have continued to emerge over the past few days, with the personal details of more than 50,000 users leaked in two separate incidents. Trezor reported a breach of personal data affecting about 14,000 users through its shipping provider, ShipMonk. Users who received its products from the US, UK, Sweden, Colombia, Brazil, Italy, and Portugal between May 10 and Aug. 8 are now at high risk from potential phishing attacks using their personal information. 

Cryptocurrency wallet provider SafePal has also just disclosed its own data breach that saw unauthorized access to almost 40,000 customers’ order information, including names, addresses and purchasing data. It has since identified and taken down more than 30 fraudulent websites and phishing links tied to the breach.

CFTC and states battle over who gets to regulate prediction markets like Kalshi and Polymarket

The US Commodity Futures Trading Commission (CFTC) has ordered prediction market Kalshi to ignore New York’s restraining order and continue operating normally.

The CFTC said that New York’s enforcement action against Kalshi for operating an illegal gambling business constituted a market emergency as it would bar Kalshi from operating prediction markets nation-wide. It believes the Commodity Exchange Act requires the CFTC to provide a uniform national derivatives market. CFTC Chair Michael Selig said that Congress did not intend derivatives exchanges to face a “patchwork of state gaming laws.”

A few days later a Washington state judge ordered prediction market platform Kalshi to stop operating in the state and rejected its argument that federal commodities law preempts Washington gambling law. Kalshi has been ordered to implement IP-address and residency-based geofencing by Aug. 19 and a GeoComply multi-source geofencing system by Sept. 2.

Even the New York City Council wants to regulated prediction markets and it has launched an investigation into prediction market firms to examine if they are using “false and deceptive marketing” through influencers to target young adults.

Ethereum Foundation revamps post-quantum plan and narrows scope for Hegota hard fork

The Ethereum Foundation is moving away from the Poseidon hash function in its planned post-quantum architecture, according to researcher Justin Drake. 

On Thursday, Drake said the foundation would instead rely on established and battle tested alternatives such as SHA or BLAKE. 

Poseidon is a relatively new hash function tailored to work better with zero knowledge proofs, which will help compress large post quantum signatures sizes. However, Drake said new developments mean that SNARKS can be tailored to work better with existing hash functions. 

A production-ready leanVM is targeted for 2027, followed by deployments across Ethereum’s consensus, data and execution layers in 2028. 

Ethereum developers are also reviewing 66 proposals to narrow them down as part of scoping the next major Ethereum upgrade to follow Glamsterdam called Hegotá

Censorship resistance proposal FOCIL is currently the only Ethereum Improvement Proposal (EIP) scheduled for inclusion. A number of other EIPs are focused on privacy.

Core developers aim to ship the Hegotá upgrade next year, while Glamsterdam is expected in the coming months.  

Tether completes first full financial audit, receives clean KPMG opinion

Tether completed the first full independent audit of its annual financial statements, with KPMG US issuing a clean opinion on the stablecoin issuer’s 2025 accounts.

The audit covered Tether’s balance sheet, income statement and cash flows for the year ended Dec. 31, 2025, including the assets backing its issued tokens and the liabilities they represent. Tether said the audited statements showed reserves exceeding liabilities by $6.814 billion.

Unlike Tether’s quarterly reserve attestations, which it has published for years, the full audit subjected the company’s broader financial statements and underlying evidence to independent examination, including transactions, systems, ownership records, valuations and counterparties.

Winners and Losers

At the end of the week, Bitcoin (BTC) is down 3.3% to trade at $62,842, Ethereum (ETH) is down 2.3% to trade at $1,872 and XRP (XRP) is down 4.2% to 99 cents. The total market cap is at $2.16 trillion according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin winners of the week are Velvet (VELVET) with a 131% gain, Ether.fi (ETHFI) on 31%, and Chainlink (LINK) on 14%.

The top three altcoin losers of the week are Uniswap (UNI) which was down 18%, Aptos (APT) down 12% and Pepe (PEPE) down 11%.

Top Prediction of the Week

Bitcoin could bottom in October, altcoins are ‘basically dead,’ Swan CEO says

Bitcoin could bottom in October before recovering to around $130,000 ahead of the 2028 halving, according to Swan Bitcoin CEO Cory Klippsten.

He argued that Bitcoin has so far bottomed about 12 months after each previous bull market peak, and the previous peak was in October last year.

He told Cointelegraph that Bitcoin could fall to $57,000, or even $53,000, before a quick recovery, and could reach around $130,000 ahead of the 2028 halving.

Top FUD of the Week

Bitcoin to $1M by 2030 is ‘mathematically impossible’ says Markus Thielen

The numbers behind the oft-cited prediction that Bitcoin will reach $1 million by 2030 simply don’t add up, according to Markus Thielen, head of research at 10x Research.

“It’s mathematically impossible,” Thielen told Trade Secrets, arguing that Bitcoin would need to attract another $15 trillion in capital to reach a per Bitcoin price of $1 million. This is equivalent to roughly 25% of the US stock market’s total value flowing into Bitcoin over the next four years.

“We have seen $1 trillion US dollars of inflow to bring the market cap really to $1 trillion. To $1 million [per] Bitcoin. It’s 15x, I think, from here.”

Bitcoin price-metric basket sees longest capitulation since FTX blow-up: Glassnode

Bitcoin is seeing its longest capitulation since the end of the 2022 bear market, onchain analytics platform Glassnode reported on Monday.

The firm said that forty-five Bitcoin (BTC) price metrics it tracks under the Bitcoin Cycle Position Heatmap show the longest “capitulation” phase since the collapse of FTX in late 2022. But it warned that aggregate readings will have to get even worse to match areas that marked previous bear-market bottoms, says creator Rafael Schultze-Kraft.

“Today it sits in its coldest stretch since FTX: late in the bear, but not yet the unanimous deep blue that previously marked a floor,” he commented.

Missouri trio charged over alleged Bitcoin kidnapping plot

Three Missouri men were charged over an alleged August 2024 plot to kidnap a Bitcoin holder and steal his holdings.

Sedric Louis, John Davis and Martel Williams were allegedly hired to kidnap and force a Bitcoin holder to transfer cryptocurrency to accounts controlled by organizers, according to a Tuesday press release by the US Attorney’s Office. They traveled from St. Louis to Connecticut, where they rented vehicles and obtained air rifles to stake out the victim.

After staking out the intended target for two days, they abandoned the plan for fear of being caught on home security cameras. Shortly afterward, another crew from Florida arrived to carry out the plan.

Top Magazine Features of the Week

Five years after El Salvador made Bitcoin legal tender, the experiment has fallen short of its original promises for locals, but it’s been great for Bitcoin’s global profile.

Suspected North Korean IT workers joined a fake crypto startup — without realizing their every move was being tracked to extract valuable intel.

Solana’s proposed fee overhaul would make resource-heavy transactions more expensive while cutting costs for simpler activity, and it increases the amount of SOL burned.

Coinbase and Ripple executives will join President Donald Trump at the White House next week. The meeting brings together major crypto companies and top financial regulators. It sets the stage for a broader push on digital asset policy.

Brian Armstrong and Brad Garlinghouse Lead the List

Brian Armstrong of Coinbase and Brad Garlinghouse of Ripple top the expected attendee list. Both executives have spent months pushing lawmakers toward clearer crypto rules. Their companies rank among the most vocal supporters of pending legislation.

Semafor first reported the details of the upcoming gathering. The outlet named several firms beyond Coinbase and Ripple as likely participants. Executives from a16z, Chainlink, Paradigm, and Kalshi are expected to attend as well.

The meeting arrives just one day before a separate but related event. Officials will use the gathering as a lead-in to a bigger regulatory session. That timing suggests the administration wants continuity between private talks and public policy work.

Regulators and Prediction Markets Join the Conversation

President Trump plans to attend the meeting alongside two key regulators. CFTC Chair Mike Selig and SEC Chair Paul Atkins are both expected to appear. Their presence signals that regulatory coordination sits high on the agenda.

The gathering also doubles as a kickoff for the CFTC’s Innovation Advisory Committee. That committee holds its first official meeting on August 20. Participants there will cover crypto regulation, artificial intelligence, and prediction markets in one session.

Prediction market platforms have grown increasingly relevant to federal regulators this year. Kalshi’s inclusion in the meeting reflects that shift in focus. Crypto and prediction markets now sit closer together in policy discussions than before.

The full agenda for the White House meeting remains undisclosed. Still, industry context points toward legislative priorities shaping the conversation. Coinbase and Ripple have both pressed the Senate to act quickly.

Clarity Act Odds Continue to Slide

Momentum behind the CLARITY Act has weakened in recent weeks. Polymarket data shows just a 19% chance the bill becomes law this year. That figure marks a renewed drop after previous signs of progress.

Galaxy Research cut its own projection even further, down to 10%. The firm pointed to unresolved legislative issues as a central concern. It also noted the Senate has limited working days before the midterm recess begins.

Armstrong has pushed back against pessimism surrounding the bill’s prospects. He remains confident that lawmakers can still pass the legislation this year. His comments came despite the bill stalling during the Senate’s August break.

Regulatory agencies appear ready to act independently if Congress does not. The SEC and CFTC could offer clarity without new legislation. Both agencies have signalled openness to guidance-based approaches this year.

The SEC recently cancelled a scheduled crypto meeting of its own. It also paused its proposed Innovation Exemption guidance for now. Officials likely want to avoid overlapping with ongoing legislative efforts.

These moves suggest agencies are timing their actions around Congress. Regulators seem to be waiting for legislative clarity before advancing new rules. The coming weeks will show whether that patience produces results.

The White House meeting therefore carries weight beyond a single afternoon. It links private industry input with public regulatory planning. Outcomes from the session could shape crypto policy for months ahead.

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